GPWA Times Magazine - Issue 42 - October 2018

that captures the consumers’ attention in the short term. Gambling consumers are also fickle and will happily switch brands in return for a new bonus offer or incentive. As such, the number of brands that can be sustained by a market does not necessarily equate to the number of brands that are succeed- ing in that market at a specific point in time — some will be at a peak, others in a relative trough. The consolidation that has taken place in recent years means that some operators are now responsible for multiple brands. As long as operating costs are not duplicated, having multiple brands can allow them to target different segments of the market and to ride out the peaks and troughs more smoothly. ANALYSIS In the graph below, GBGC has plotted the number of people per issued iGam- ing license and the total gross gaming yield (GGY) per capita for a selection of jurisdictions. At one extreme of the graph, Canada appears to have too few licenses in issue, given its population and propensity to gamble. At present, only provincial lotteries can obtain iGaming licenses in Canada. At the other extreme, Denmark and the U.K. likely have too many licenses issued, strictly from the perspective of meeting the demands of their gamblers. Interestingly, New Jersey, the jurisdiction that sparked the original question, sits in the center of the graph in relation to its ex- isting iGaming sector. This might suggest New Jersey has about the right number of license holders for its market demand. But the performance of New Jersey’s iGaming sector has generally underperformed the expectations of many pundits, particularly liquidity-dependent poker. For a sustainable market, the New Jersey sports betting sector should have fewer brands than are currently available, es- pecially if other sports betting brands are operating in neighboring states. CONCLUSION In assessments of how many brands a mar- ket can sustain, there is often a presump- tion of economically rational behavior on the part of governments, regulators and operators that is not always evident—for example, setting prohibitive tax rates that limit the attractiveness of products and discourage consumers from using regulated operators, and paying over the odds for a license or taking a license in a market where turning a profit is almost impossible. A CEO of an iGaming supplier recently said in an interview, “Our ultimate goal is to procure licenses in every regulated market in which they are offered. We don’t care if they cost more than we canmake there; it is all about being a full-service supplier with a truly global footprint. In some cases, the re- turn on investment will be strong, in others weak, but our policy is not to cherry-pick.” If such thinking is adopted by iGaming firms in their approach to U.S. sports bet- ting because they have a fear of missing out, then the number of brands a market can sustain is unlimited. Lorien Pilling has 15 years’ experience in the gambling sector. Since 2008, he has been a research at Global Bet- ting and Gaming Consultants, which provides practical and insightful consultancy, data and market reports for the global gambling industry. GBGC research: licenses and gambling propensity Population (m) per license and GGY per capita (US$) Source: GBGC Global Gambling Report - 13 th edition 2018 The number of brands that can be sustained by a market does not necessarily equate to the number of brands that are succeeding in that market at a specific point in time — some will be at a peak , others in a relative trough . 10 9 8 7 6 5 4 3 2 1 0 800 700 600 500 400 300 200 100 0 Canada Hong Kong US France South Africa New Zealand Finland New Jersey Portugal Spain Italy Asutralia Denmark UK GGY per capita (US$) (right axis) Population per license (m) ONE TOO MANY? G P W A t i m e s . o r g 46